Technology

Illumina Reports Financial Results for Second Quarter of Fiscal Year 2024

Published

2 years ago

August 6, 2024

Core Illumina revenue of $1.09 billion for Q2 2024, down 6% from Q2 2023 (down 6% on a constant currency basis) and up 3% from Q1 2024Core Illumina GAAP operating margin of 40.5% and non-GAAP operating margin of 22.2% for Q2 2024Core Illumina GAAP diluted earnings per share of $0.41 and non-GAAP diluted earnings per share of $1.09 for Q2 2024Lowered fiscal year 2024 Core Illumina revenue guidance to decline 2% to 3% (down 1.5% to 2.5% in constant currency) from 2023Raised Core Illumina non-GAAP operating margin guidance to a range of 20.5% to 21% for fiscal year 2024Introducing guidance for Core Illumina non-GAAP diluted earnings per share in the range of $3.80 to $3.95 for fiscal year 2024On June 24, 2024, we completed the spin-off of GRAIL into a new public company

SAN DIEGO, Aug. 6, 2024 /PRNewswire/ — Illumina, Inc. (Nasdaq: ILMN) (“Illumina” or the “company”) today announced its financial results for the second quarter of fiscal year 2024, which include the consolidated financial results for GRAIL through June 24, 2024.

“The Illumina team delivered results ahead of our expectations in the quarter, driven by disciplined execution on our strategic priorities,” said Jacob Thaysen, Chief Executive Officer. “Consumable sales remained solid as customers continued to increase their sequencing activity, but instrument demand has softened in a constrained funding environment. We are progressing our operating excellence initiatives and will deliver expanded margins this year.”

Second quarter consolidated results

GAAP

Non-GAAP (a)

Dollars in millions, except per share amounts

Q2 2024

Q2 2023

Q2 2024

Q2 2023

Revenue

$ 1,112

$ 1,176

$ 1,112

$ 1,176

Gross margin

64.8 %

62.2 %

69.0 %

66.5 %

Research and development (“R&D”) expense

$ 325

$ 358

$ 325

$ 345

Selling, general and administrative (“SG&A”) expense

$ 147

$ 462

$ 358

$ 355

Goodwill and intangible impairment (b)

$ 1,886

$ —

Operating (loss) profit

$ (1,637)

$ (88)

$ 84

$ 82

Operating margin

(147.2) %

(7.5) %

7.6 %

7.0 %

Tax provision

$ 12

$ 145

$ 16

$ 33

Tax rate

(0.6) %

(163.8) %

22.3 %

39.3 %

Net (loss) income

$ (1,988)

$ (234)

$ 57

$ 50

Diluted (loss) earnings per share

$ (12.48)

$ (1.48)

$ 0.36

$ 0.32

(a) See the tables included in the “Results of Operations – Non-GAAP” section below for reconciliations of these GAAP and non-GAAP financial measures.

(b) During the second quarter of 2024, the company recognized $1,466 million in goodwill and $420 million in intangible asset (IPR&D) impairment related to the GRAIL segment.

Capital expenditures for free cash flow purposes were $32 million for Q2 2024. Cash flow provided by operations was $80 million, compared to cash flow provided by operations of $105 million in the prior year period. Free cash flow (cash flow provided by operations less capital expenditures) was $48 million for the quarter, compared to $58 million in the prior year period. Depreciation and amortization expenses were $105 million for Q2 2024. At the close of the quarter, the company held $994 million in cash, cash equivalents and short-term investments.

Second quarter segment results
Illumina has two reportable segments, Core Illumina and GRAIL, which was spun-off on June 24, 2024.

Core Illumina

GAAP

Non-GAAP (a)

Dollars in millions

Q2 2024

Q2 2023

Q2 2024

Q2 2023

Revenue (b)

$ 1,092

$ 1,159

$ 1,092

$ 1,159

Gross margin (c)

68.0 %

65.5 %

69.4 %

67.0 %

R&D expense

$ 241

$ 274

$ 241

$ 261

SG&A expense

$ 60

$ 371

$ 275

$ 270

Operating profit

$ 442

$ 115

$ 242

$ 245

Operating margin

40.5 %

9.9 %

22.2 %

21.2 %

Tax provision

$ 35

$ 55

Tax rate

35.0 %

24.2 %

Net income

$ 66

$ 174

Diluted earnings per share

$ 0.41

$ 1.09

* Prior year information not provided.

(a) See the tables included in the “Results of Operations – Non-GAAP” section below for reconciliations of these GAAP and non-GAAP financial measures.

(b) Core Illumina revenue for Q2 2024 was down 6% as compared to Q2 2023 and down 6% on a constant currency basis. Amounts for Q2 2024 and Q2 2023 included intercompany revenue of $9 million and $5 million, respectively, which is eliminated in consolidation.

(c) The year-over-year increase in gross margin was primarily driven by a more favorable mix of sequencing consumables and execution of our operational excellence priorities that delivered cost savings, including freight and improved productivity.

GRAIL

GAAP

Non-GAAP (a)

In millions

Q2 2024

Q2 2023

Q2 2024

Q2 2023

Revenue

$ 29

$ 22

$ 29

$ 22

Gross (loss) profit

$ (16)

$ (24)

$ 15

$ 9

R&D expense

$ 88

$ 89

$ 88

$ 89

SG&A expense

$ 88

$ 91

$ 84

$ 85

Goodwill and intangible impairment

$ 1,886

$ —

Operating loss

$ (2,078)

$ (204)

$ (157)

$ (164)

(a) See Table 5 included in the “Results of Operations – Non-GAAP” section below for reconciliations of these GAAP and non-GAAP financial measures.

Key announcements by Illumina since Illumina’s last earnings release

Completed the spin-off of GRAILAcquired Fluent Biosciences, developer of an emerging and highly differentiated single-cell technologyAppointed Everett Cunningham as Chief Commercial OfficerAnnounced that Anna Richo, Corporate Senior Vice President, Strategic Advisor to the General Counsel and CEO at Cargill, Inc., joined Illumina’s Board of DirectorsPresented research at the American Society of Clinical Oncology (ASCO) Annual Meeting, with 14 total abstracts accepted to the meetingCompleted integration of Illumina’s latest chemistry, XLEAP-SBS™, into all reagents for its NextSeq™ 1000 and NextSeq 2000 next-generation sequencing instrumentsExpanded its oncology menu for NovaSeq™ X Series customers by offering the newly verified high-throughput version of TruSight™ Oncology 500 (TSO 500 HT), and the latest version of its distributed liquid biopsy research assay, TruSight Oncology 500 ctDNA v2 (TSO 500 ctDNA v2)Launched DRAGEN™ v4.3, the latest version of Illumina’s DRAGEN™ software, part of the Illumina Connected Software portfolio, for analysis of next-generation sequencing data

A full list of recent Illumina announcements can be found in the company’s News Center.

Financial outlook and guidance
For fiscal year 2024, the company lowered its Core Illumina revenue guidance to decline 2% to 3% (down 1.5% to 2.5% in constant currency) compared to fiscal year 2023 and raised its Core Illumina non-GAAP operating margin guidance to a range of 20.5% to 21%. The company is introducing guidance for Core Illumina non-GAAP diluted EPS in the range of $3.80 to $3.95 for fiscal year 2024.

The company provides forward-looking guidance on a non-GAAP basis. The company is unable to provide a reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP reported financial measures because it is unable to predict with reasonable certainty the financial impact of items such as acquisition-related expenses, gains and losses from our strategic investments, fair value adjustments related to contingent consideration and contingent value rights, potential future asset impairments, restructuring activities, and the ultimate outcome of pending litigation without unreasonable effort. These items are uncertain, inherently difficult to predict, depend on various factors, and could have a material impact on GAAP reported results for the guidance period. For the same reasons, the company is unable to address the significance of the unavailable information, which could be material to future results.

Conference call information
The conference call will begin at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) on Tuesday, August 6, 2024. Interested parties may access the live teleconference through the Investor Info section of Illumina’s website at investor.illumina.com. Alternatively, individuals can access the call by dialing 866.400.0049 or +1.323.701.0231 outside North America, both using conference ID 9881025. To ensure timely connection, please dial in at least ten minutes before the scheduled start of the call.

A replay of the conference call will be posted on Illumina’s website after the event and will be available for at least 30 days following.

Statement regarding use of non-GAAP financial measures
The company reports non-GAAP results for diluted earnings per share, net income, gross margin, operating expenses, including research and development expense, selling general and administrative expense, and from time to time, as applicable, legal contingencies and settlement, and goodwill and intangible impairment, operating income (loss), operating margin, gross profit (loss), other income (expense), tax provision, constant currency revenue growth, and free cash flow (on a consolidated and, as applicable, segment basis) in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. The company’s financial measures under GAAP include substantial charges such as amortization of acquired intangible assets among others that are listed in the itemized reconciliations between GAAP and non-GAAP financial measures included in this press release, as well as the effects of currency translation. Management has excluded the effects of these items in non-GAAP measures to assist investors in analyzing and assessing past and future operating performance, including in the non-GAAP measures related to our segments. Additionally, non-GAAP net income, diluted earnings per share and operating margin are key components of the financial metrics utilized by the company’s board of directors to measure, in part, management’s performance and determine significant elements of management’s compensation.

The company encourages investors to carefully consider its results under GAAP, as well as its supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand its business. Reconciliations between GAAP and non-GAAP results are presented in the tables of this release.

Use of forward-looking statements
This release may contain forward-looking statements that involve risks and uncertainties. Among the important factors to which our business is subject that could cause actual results to differ materially from those in any forward-looking statements are: (i) changes in the rate of growth in the markets we serve; (ii) the volume, timing and mix of customer orders among our products and services; (iii) our ability to adjust our operating expenses to align with our revenue expectations; (iv) our ability to manufacture robust instrumentation and consumables; (v) the success of products and services competitive with our own; (vi) challenges inherent in developing, manufacturing, and launching new products and services, including expanding or modifying manufacturing operations and reliance on third-party suppliers for critical components; (vii) the impact of recently launched or pre-announced products and services on existing products and services; (viii) our ability to modify our business strategies to accomplish our desired operational goals; (ix) our ability to realize the anticipated benefits from prior or future actions to streamline and improve our R&D processes, reduce our operating expenses and maximize our revenue growth; (x) our ability to further develop and commercialize our instruments, consumables, and products; (xi) to deploy new products, services, and applications, and to expand the markets for our technology platforms; (xii) the risks and costs associated with the divestment of GRAIL; (xiii) the risk of additional litigation arising against us in connection with the GRAIL acquisition; (xiv) our ability to obtain approval by third-party payors to reimburse patients for our products; (xv) our ability to obtain regulatory clearance for our products from government agencies; (xvi) our ability to successfully partner with other companies and organizations to develop new products, expand markets, and grow our business; (xvii) uncertainty, or adverse economic and business conditions, including as a result of slowing or uncertain economic growth or armed conflict; (xviii) the application of generally accepted accounting principles, which are highly complex and involve many subjective assumptions, estimates, and judgments and (xix) legislative, regulatory and economic developments, together with other factors detailed in our filings with the Securities and Exchange Commission, including our most recent filings on Forms 10-K and 10-Q, or in information disclosed in public conference calls, the date and time of which are released beforehand. We undertake no obligation, and do not intend, to update these forward-looking statements, to review or confirm analysts’ expectations, or to provide interim reports or updates on the progress of the current quarter.

About Illumina
Illumina is improving human health by unlocking the power of the genome. Our focus on innovation has established us as a global leader in DNA sequencing and array-based technologies, serving customers in the research, clinical, and applied markets. Our products are used for applications in the life sciences, oncology, reproductive health, agriculture, and other emerging segments. To learn more, visit www.illumina.com and connect with us on X (Twitter), Facebook, LinkedIn, Instagram, TikTok, and YouTube.

About GRAIL
GRAIL is a healthcare company whose mission is to detect cancer early, when it can be cured. GRAIL is focused on alleviating the global burden of cancer by developing pioneering technology to detect and identify multiple deadly cancer types early. The company is using the power of next-generation sequencing, population-scale clinical studies, and state-of-the-art computer science and data science to enhance the scientific understanding of cancer biology, and to develop its multi-cancer early detection blood test. GRAIL is headquartered in Menlo Park, CA with locations in Washington, D.C., North Carolina, and the United Kingdom. GRAIL, Inc. was spun-out into a new public company on June 24, 2024. For more information, please visit www.grail.com.

Illumina, Inc.

Condensed Consolidated Balance Sheets

(In millions)

June 30,
2024

December 31,
2023

ASSETS

(unaudited)

Current assets:

Cash and cash equivalents

$ 920

$ 1,048

Short-term investments

Accounts receivable, net

641

734

Inventory, net

561

587

Prepaid expenses and other current assets

263

234

Total current assets

2,459

2,609

Property and equipment, net

859

1,007

Operating lease right-of-use assets

460

544

Goodwill

1,079

2,545

Intangible assets, net

278

2,993

Deferred tax assets, net

632

Other assets

314

357

Total assets

$ 6,081

$ 10,111

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$ 199

$ 245

Accrued liabilities

1,265

1,325

Term debt, current portion

744

—

Total current liabilities

2,208

1,570

Operating lease liabilities

616

687

Term debt

1,490

1,489

Other long-term liabilities

331

620

Stockholders’ equity

1,436

5,745

Total liabilities and stockholders’ equity

$ 6,081

$ 10,111

Illumina, Inc.

Condensed Consolidated Statements of Operations

(In millions, except per share amounts)

(unaudited)

Three Months Ended

Six Months Ended

June 30,
2024

July 2,
2023

June 30,
2024

July 2,
2023

Revenue:

Product revenue

$ 927

$ 1,001

$ 1,803

$ 1,923

Service and other revenue

185

175

385

340

Total revenue

1,112

1,176

2,188

2,263

Cost of revenue:

Cost of product revenue (a)

250

305

504

591

Cost of service and other revenue (a)

202

190

Amortization of acquired intangible assets

Total cost of revenue

391

444

800

877

Gross profit

721

732

1,388

1,386

Operating expense:

Research and development (a)

325

358

660

699

Selling, general and administrative (a)

147

462

588

839

Goodwill and intangible impairment

1,886

—

1,889

—

Total operating expense

2,358

820

3,137

1,538

Loss from operations

(1,637)

(88)

(1,749)

(152)

Other expense, net

(339)

(1)

(337)

(15)

Loss before income taxes

(1,976)

(89)

(2,086)

(167)

Provision for income taxes

145

Net loss

$ (1,988)

$ (234)

$ (2,114)

$ (231)

Loss per share:

Basic

$ (12.48)

$ (1.48)

$ (13.28)

$ (1.46)

Diluted

$ (12.48)

$ (1.48)

$ (13.28)

$ (1.46)

Shares used in computing loss per share:

Basic

159

158

159

158

Diluted

159

158

159

158

(a) Includes stock-based compensation expense for stock-based awards:

Three Months Ended

Six Months Ended

June 30,
2024

July 2,
2023

June 30,
2024

July 2,
2023

Cost of product revenue

$ 7

$ 8

$ 13

$ 15

Cost of service and other revenue

Research and development

Selling, general and administrative

109

Stock-based compensation expense before taxes

$ 110

$ 105

$ 208

$ 199

Illumina, Inc.

Condensed Consolidated Statements of Cash Flows

(In millions)

(unaudited)

Three Months Ended

Six Months Ended

June 30,
2024

July 2,
2023

June 30,
2024

July 2,
2023

Net cash provided by operating activities

$ 80

$ 105

$ 157

$ 115

Net cash used in investing activities

(41)

(37)

(89)

(93)

Net cash used in financing activities

(225)

(3)

(191)

(476)

Effect of exchange rate changes on cash and cash equivalents

(2)

(6)

(5)

(4)

Net (decrease) increase in cash and cash equivalents

(188)

(128)

(458)

Cash and cash equivalents, beginning of period

1,108

1,494

1,048

2,011

Cash and cash equivalents, end of period

$ 920

$ 1,553

$ 920

$ 1,553

Calculation of free cash flow:

Net cash provided by operating activities

$ 80

$ 105

$ 157

$ 115

Purchases of property and equipment

(32)

(47)

(67)

(99)

Free cash flow (a)

$ 48

$ 58

$ 90

$ 16

(a) Free cash flow, which is a non-GAAP financial measure, is calculated as net cash provided by operating activities reduced by purchases of property and equipment. Free cash flow is useful to management as it is one of the metrics used to evaluate our performance and to compare us with other companies in our industry. However, our calculation of free cash flow may not be comparable to similar measures used by other companies.

Illumina, Inc.

Results of Operations – Revenue by Segment

(Dollars in millions)

(unaudited)

Three Months Ended

Six Months Ended

June 30,
2024

July 2,
2023

% Change

June 30,
2024

July 2,
2023

% Change

Consolidated revenue

$ 1,112

$ 1,176

(5) %

$ 2,188

$ 2,263

(3) %

Less: Hedge gains

Consolidated revenue, excluding hedge effect

1,108

1,174

2,181

2,260

Less: Exchange rate effect

(5)

—

(7)

—

Consolidated constant currency revenue (a)

$ 1,113

$ 1,174

(5) %

$ 2,188

$ 2,260

(3) %

Core Illumina revenue

$ 1,092

$ 1,159

(6) %

$ 2,148

$ 2,235

(4) %

Less: Hedge gains

Core Illumina revenue, excluding hedge effect

1,088

1,157

2,141

2,232

Less: Exchange rate effect

(5)

—

(7)

—

Core Illumina constant currency revenue (a)

$ 1,093

$ 1,157

(6) %

$ 2,148

$ 2,232

(4) %

(a) Constant currency revenue growth, which is a non-GAAP financial measure, is calculated using comparative prior period foreign exchange rates to translate current period revenue, net of the effects of hedges.

Illumina, Inc.
Results of Operations – Non-GAAP
(In millions, except per share amounts)
(unaudited)

TABLE 1: CONSOLIDATED RECONCILIATION BETWEEN GAAP AND NON-GAAP DILUTED (LOSS) EARNINGS PER SHARE:

Three Months Ended

Six Months Ended

June 30,
2024

July 2,
2023

June 30,
2024

July 2,
2023

GAAP loss per share – diluted

$ (12.48)

$ (1.48)

$ (13.28)

$ (1.46)

Cost of revenue (b)

0.29

0.32

0.60

0.63

R&D expense (b)

—

0.08

0.01

0.09

SG&A expense (b)

(1.33)

0.68

(0.75)

0.89

Goodwill and intangible impairment (b)

11.84

—

11.86

—

Other expense, net (b)

2.06

0.01

2.01

0.08

GILTI, U.S. foreign tax credits, and global minimum top-up tax (c)

0.62

0.44

0.73

0.16

Incremental non-GAAP tax expense (d)

(0.65)

0.27

(0.74)

(0.04)

Income tax provision (e)

0.01

—

0.01

0.05

Non-GAAP earnings per share – diluted (a)

$ 0.36

$ 0.32

$ 0.45

$ 0.40

TABLE 2: CONSOLIDATED RECONCILIATION BETWEEN GAAP AND NON-GAAP NET (LOSS) INCOME:

Three Months Ended

Six Months Ended

June 30,
2024

July 2,
2023

June 30,
2024

July 2,
2023

GAAP net loss

$ (1,988)

$ (234)

$ (2,114)

$ (231)

Cost of revenue (b)

R&D expense (b)

—

SG&A expense (b)

(211)

107

(120)

142

Goodwill and intangible impairment (b)

1,886

—

1,889

—

Other expense, net (b)

328

319

GILTI, U.S. foreign tax credits, and global minimum top-up tax (c)

116

Incremental non-GAAP tax expense (d)

(104)

(117)

(6)

Income tax provision (e)

—

Non-GAAP net income (a)

$ 57

$ 50

$ 71

$ 64

Illumina, Inc.
Results of Operations – Non-GAAP (continued)
(In millions, except per share amounts)
(unaudited)

TABLE 3: CORE ILLUMINA RECONCILIATION BETWEEN GAAP AND NON-GAAP DILUTED EARNINGS PER SHARE:

Three Months Ended

Six Months Ended

June 30,
2024

GAAP earnings per share – diluted

$ 0.41

$ 0.85

Cost of revenue (b)

0.10

0.19

R&D expense (b)

—

0.01

SG&A expense (b)

(1.35)

(0.84)

Goodwill and intangible impairment (b)

—

0.02

Other expense, net (b)

2.06

2.01

GILTI, U.S. foreign tax credits, and global minimum top-up tax (c)

0.12

0.21

Incremental non-GAAP tax expense (d)

(0.26)

(0.39)

Income tax provision (e)

0.01

Non-GAAP earnings per share – diluted (a)

$ 1.09

$ 2.07

TABLE 4: CORE ILLUMINA RECONCILIATION BETWEEN GAAP AND NON-GAAP NET INCOME:

Three Months Ended

Six Months Ended

June 30,
2024

GAAP net income

$ 66

$ 135

Cost of revenue (b)

R&D expense (b)

—

SG&A expense (b)

(215)

(132)

Goodwill and intangible impairment (b)

—

Other expense, net (b)

328

319

GILTI, U.S. foreign tax credits, and global minimum top-up tax (c)

Incremental non-GAAP tax expense (d)

(41)

(62)

Income tax provision (e)

Non-GAAP net income (a)

$ 174

$ 329

All amounts in tables are rounded to the nearest millions, except as otherwise noted. As a result, certain amounts may not recalculate using the rounded amounts provided.

(a) Non-GAAP net income and diluted earnings per share exclude the effects of the pro forma adjustments as detailed above. Non-GAAP net income and diluted earnings per share are key components of the financial metrics utilized by the company’s board of directors to measure, in part, management’s performance and determine significant elements of management’s compensation. Management has excluded the effects of these items in these measures to assist investors in analyzing and assessing our past and future operating performance.

(b) Refer to the Itemized Reconciliations between GAAP and Non-GAAP Results of Operations for the components of these amounts.

(c) Amounts represent the impact of GRAIL pre-acquisition net operating losses on GILTI, the utilization of U.S. foreign tax credits, and the Pillar Two global minimum top-up tax, which became effective in Q1 2024.

(d) Incremental non-GAAP tax expense reflects the tax impact of the non-GAAP adjustments listed.

(e) Amounts represent the difference between book and tax accounting related to stock-based compensation cost.

Illumina, Inc.
Results of Operations – Non-GAAP (continued)
(Dollars in millions)
(unaudited)

TABLE 5: ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP RESULTS OF OPERATIONS AS A PERCENT OF REVENUE:

Three Months Ended

June 30, 2024

Core Illumina

GRAIL

Eliminations

Consolidated

GAAP gross profit (loss) (b)

$ 743

68.0 %

$ (16)

$ (6)

$ 721

64.8 %

Amortization of acquired intangible assets

1.4 %

—

4.2 %

Non-GAAP gross profit (a)

$ 758

69.4 %

$ 15

$ (6)

$ 767

69.0 %

GAAP and Non-GAAP R&D expense

$ 241

22.1 %

$ 88

$ (4)

$ 325

29.2 %

GAAP SG&A expense

$ 60

5.5 %

$ 88

$ (1)

$ 147

13.2 %

Amortization of acquired intangible assets

—

(1)

—

(1)

(0.1) %

Contingent consideration liabilities (c)

271

24.8 %

—

271

24.4 %

Acquisition-related expenses (d)

(46)

(4.2) %

(3)

—

(49)

(4.4) %

Restructuring (g)

(3)

(0.3) %

—

(3)

(0.3) %

Accrued interest on EC fine (h)

(7)

(0.6) %

—

(7)

(0.6) %

Non-GAAP SG&A expense

$ 275

25.2 %

$ 84

$ (1)

$ 358

32.2 %

GAAP goodwill and intangible impairment

$ —

—

$ 1,886

$ —

$ 1,886

169.6 %

Goodwill impairment (i)

—

(1,466)

—

(1,466)

(131.8) %

Intangible (IPR&D) impairment (i)

—

(420)

—

(420)

(37.8) %

Non-GAAP goodwill and intangible impairment

$ —

—

$ —

—

GAAP operating profit (loss)

$ 442

40.5 %

$ (2,078)

$ (1)

$ (1,637)

(147.2) %

Cost of revenue

1.4 %

—

4.2 %

SG&A costs

(215)

(19.7) %

—

(211)

(19.0) %

Goodwill and intangible impairment

—

1,886

—

1,886

169.6 %

Non-GAAP operating profit (loss) (a)

$ 242

22.2 %

$ (157)

$ (1)

$ 84

7.6 %

GAAP other (expense) income, net

$ (341)

(31.2) %

$ 2

$ —

$ (339)

(30.5) %

Strategic investment related loss, net (e)

334

30.5 %

—

334

30.0 %

Gain on Helix contingent value right (f)

(8)

(0.7) %

—

(8)

(0.7) %

Foreign currency loss on EC fine (j)

0.2 %

—

0.2 %

Non-GAAP other (expense) income, net (a)

$ (13)

(1.2) %

$ 2

$ —

$ (11)

(1.0) %

Illumina, Inc.
Results of Operations – Non-GAAP (continued)
(Dollars in millions)
(unaudited)

TABLE 5 (CONTINUED): ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP RESULTS OF OPERATIONS AS A PERCENT OF REVENUE:

Three Months Ended

July 2, 2023

Core Illumina

GRAIL

Eliminations

Consolidated

GAAP gross profit (loss) (b)

$ 760

65.5 %

$ (24)

$ (4)

$ 732

62.2 %

Amortization of acquired intangible assets

1.2 %

—

4.0 %

Restructuring (g)

0.3 %

—

0.3 %

Non-GAAP gross profit (a)

$ 777

67.0 %

$ 9

$ (4)

$ 782

66.5 %

GAAP R&D expense

$ 274

23.6 %

$ 89

$ (5)

$ 358

30.4 %

Acquisition-related expenses (d)

(1)

(0.1) %

—

(1)

(0.1) %

Restructuring (g)

(12)

(1.0) %

—

(12)

(1.0) %

Non-GAAP R&D expense

$ 261

22.5 %

$ 89

$ (5)

$ 345

29.3 %

GAAP SG&A expense

$ 371

31.9 %

$ 91

$ —

$ 462

39.3 %

Amortization of acquired intangible assets

—

(1)

—

(1)

(0.1) %

Contingent consideration liabilities (c)

(29)

(2.5) %

—

(29)

(2.5) %

Acquisition-related expenses (d)

(18)

(1.4) %

(3)

—

(21)

(1.8) %

Restructuring (g)

(17)

(1.5) %

(2)

—

(19)

(1.6) %

Legal contingency and settlement (k)

(12)

(1.0) %

—

(12)

(1.0) %

Proxy contest

(25)

(2.2) %

—

(25)

(2.1) %

Non-GAAP SG&A expense

$ 270

23.3 %

$ 85

$ —

$ 355

30.2 %

GAAP operating profit (loss)

$ 115

9.9 %

$ (204)

$ 1

$ (88)

(7.5) %

Cost of revenue

1.5 %

—

4.3 %

R&D costs

1.1 %

—

1.1 %

SG&A costs

100

8.7 %

—

107

9.1 %

Non-GAAP operating profit (loss) (a)

$ 245

21.2 %

$ (164)

$ 1

$ 82

7.0 %

GAAP other (expense) income, net

$ (3)

(0.3) %

$ 2

$ —

$ (1)

(0.1) %

Strategic investment related loss, net (e)

0.2 %

—

0.2 %

Non-GAAP other (expense) income, net (a)

$ (1)

(0.1) %

$ 2

$ —

$ 1

0.1 %

Illumina, Inc.
Results of Operations – Non-GAAP (continued)
(Dollars in millions)
(unaudited)

TABLE 5 (CONTINUED): ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP RESULTS OF OPERATIONS AS A PERCENT OF REVENUE:

Six Months Ended

June 30, 2024

Core Illumina

GRAIL

Eliminations

Consolidated

GAAP gross profit (loss) (b)

$ 1,436

66.9 %

$ (38)

$ (10)

$ 1,388

63.5 %

Amortization of acquired intangible assets

1.4 %

—

4.3 %

Non-GAAP gross profit (a)

$ 1,466

68.3 %

$ 27

$ (10)

$ 1,483

67.8 %

GAAP R&D expense

$ 479

22.3 %

$ 189

$ (8)

$ 660

30.2 %

Restructuring (g)

(2)

(0.1) %

—

(2)

(0.1) %

Non-GAAP R&D expense

$ 477

22.2 %

$ 189

$ (8)

$ 658

30.1 %

GAAP SG&A expense

$ 396

18.5 %

$ 192

$ —

$ 588

26.9 %

Amortization of acquired intangible assets

—

(2)

—

(2)

(0.1) %

Contingent consideration liabilities (c)

255

11.9 %

—

255

11.7 %

Acquisition-related expenses (d)

(70)

(3.3) %

(11)

—

(81)

(3.7) %

Restructuring (g)

(38)

(1.8) %

(1)

—

(39)

(1.8) %

Accrued interest on EC fine (h)

(14)

(0.7) %

—

(14)

(0.7) %

Non-GAAP SG&A expense

$ 529

24.6 %

$ 178

$ —

$ 707

32.3 %

GAAP goodwill and intangible impairment

$ 3

0.1 %

$ 1,886

$ —

$ 1,889

86.3 %

Goodwill impairment (i)

—

(1,466)

—

(1,466)

(67.0) %

Intangible (IPR&D) impairment (i)

(3)

(0.1) %

(420)

—

(423)

(19.3) %

Non-GAAP goodwill and intangible impairment

$ —

—

$ —

—

GAAP operating profit (loss)

$ 558

26.0 %

$ (2,305)

$ (2)

$ (1,749)

(79.9) %

Cost of revenue

1.4 %

—

4.3 %

R&D costs

0.1 %

—

0.1 %

SG&A costs

(133)

(6.2) %

—

(120)

(5.4) %

Goodwill and intangible impairment

0.1 %

1,886

—

1,889

86.3 %

Non-GAAP operating profit (loss) (a)

$ 460

21.4 %

$ (341)

$ (2)

$ 117

5.4 %

GAAP other (expense) income, net

$ (342)

(15.9) %

$ 5

$ —

$ (337)

(15.4) %

Strategic investment related loss, net (e)

327

15.2 %

—

327

15.0 %

Gain on Helix contingent value right (f)

(11)

(0.5) %

—

(11)

(0.5) %

Foreign currency loss on EC fine (j)

0.1 %

—

0.1 %

Non-GAAP other (expense) income, net (a)

$ (23)

(1.1) %

$ 5

$ —

$ (18)

(0.8) %

Illumina, Inc.
Results of Operations – Non-GAAP (continued)
(Dollars in millions)
(unaudited)

TABLE 5 (CONTINUED): ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP RESULTS OF OPERATIONS AS A PERCENT OF REVENUE:

Six Months Ended

July 2, 2023

Core Illumina

GRAIL

Eliminations

Consolidated

GAAP gross profit (loss) (b)

$ 1,446

64.7 %

$ (50)

$ (10)

$ 1,386

61.3 %

Amortization of acquired intangible assets

1.3 %

—

4.2 %

Restructuring (g)

0.1 %

—

0.1 %

Non-GAAP gross profit (a)

$ 1,478

66.1 %

$ 17

$ (10)

$ 1,485

65.6 %

GAAP R&D expense

$ 532

23.7 %

$ 175

$ (8)

$ 699

30.9 %

Acquisition-related expenses (d)

(1)

—

(1)

—

Restructuring (g)

(13)

(0.5) %

—

(13)

(0.6) %

Non-GAAP R&D expense

$ 518

23.2 %

$ 175

$ (8)

$ 685

30.3 %

GAAP SG&A expense

$ 656

29.4 %

$ 184

$ (1)

$ 839

37.1 %

Amortization of acquired intangible assets

—

(2)

—

(2)

(0.1) %

Contingent consideration liabilities (c)

(28)

(1.3) %

—

(28)

(1.2) %

Acquisition-related expenses (d)

(38)

(1.7) %

(9)

—

(47)

(2.1) %

Restructuring (g)

(17)

(0.7) %

(2)

—

(19)

(0.8) %

Legal contingency and settlement (k)

(15)

(0.7) %

—

(15)

(0.7) %

Proxy contest

(31)

(1.4) %

—

(31)

(1.4) %

Non-GAAP SG&A expense

$ 527

23.6 %

$ 171

$ (1)

$ 697

30.8 %

GAAP operating profit (loss)

$ 257

11.5 %

$ (408)

$ (1)

$ (152)

(6.7) %

Cost of revenue

1.4 %

—

4.3 %

R&D costs

0.6 %

—

0.6 %

SG&A costs

129

5.8 %

—

142

6.3 %

Non-GAAP operating profit (loss) (a)

$ 432

19.3 %

$ (328)

$ (1)

$ 103

4.5 %

GAAP other (expense) income, net

$ (19)

(0.9) %

$ 4

$ —

$ (15)

(0.7) %

Strategic investment related loss, net (e)

0.7 %

—

0.7 %

Gain on Helix contingent value right (f)

(3)

(0.1) %

—

(3)

(0.1) %

Non-GAAP other (expense) income, net (a)

$ (6)

(0.3) %

$ 4

$ —

$ (2)

(0.1) %

All amounts in tables are rounded to the nearest millions, except as otherwise noted. As a result, certain amounts may not recalculate using the rounded amounts provided. Percentages of revenue are calculated based on the revenue of the respective segment.

(a) Non-GAAP gross profit, included within non-GAAP operating profit (loss), is a key measure of the effectiveness and efficiency of manufacturing processes, product mix and the average selling prices of our products and services. Non-GAAP operating profit (loss) and non-GAAP other (expense) income, net exclude the effects of the pro forma adjustments as detailed above. Non-GAAP operating margin is a key component of the financial metrics utilized by the company’s board of directors to measure, in part, management’s performance and determine significant elements of management’s compensation. Management has excluded the effects of these items in these measures to assist investors in analyzing and assessing past and future operating performance, including in the non-GAAP measures related to our segments.

(b) Reconciling amounts are recorded in cost of revenue.

(d) Amounts consist primarily of legal and other expenses related to the acquisition and divestiture of GRAIL.

(e) Amounts consist primarily of mark-to-market adjustments and impairments from our strategic investments. Amounts for Q2 2024 and YTD 2024 primarily relate to the impairment on our retained investment in GRAIL post spin-off.

(f) Amounts consist of fair value adjustments related to our Helix contingent value right.

(g) Amount for Q2 2024 consists primarily of employee severance costs. Amount for YTD 2024 consists primarily of lease and other asset impairments. Amounts for Q2 2023 and YTD 2023 consist primarily of employee severance costs and lease and other asset impairments.

(h) Amounts for Q2 2024 and YTD 2024 consist of accrued interest on the fine imposed by the European Commission.

(i) Amounts for Q2 2024 and YTD 2024 consist of goodwill and IPR&D intangible asset impairments related to GRAIL. Amount for YTD 2024 also consists of an IPR&D intangible asset impairment related to Core Illumina in Q1 2024.

(j) Amounts for Q2 2024 and YTD 2024 consist of unrealized gains/losses related to foreign currency balance sheet remeasurement of the EC fine liability and unrealized/realized mark-to-market gains/losses on the hedge associated with the EC fine.

(k) Amount for Q2 2023 consists of an adjustment to our accrual for the fine imposed by the European Commission. Amount for YTD 2023 also consists of a loss related to a patent litigation settlement in Q1 2023.

Illumina, Inc.
Results of Operations – Non-GAAP (continued)
(Dollars in millions)
(unaudited)

TABLE 6: CONSOLIDATED ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP TAX PROVISION:

Three Months Ended

Six Months Ended

June 30,
2024

GAAP tax provision

$ 12

(0.6) %

$ 28

(1.4) %

Incremental non-GAAP tax expense (b)

104

117

Income tax provision (c)

(1)

GILTI, U.S. foreign tax credits, and global minimum top-up tax (d)

(99)

(116)

Non-GAAP tax provision (a)

$ 16

22.3 %

$ 28

28.8 %

Three Months Ended

Six Months Ended

July 2,
2023

GAAP tax provision

$ 145

(163.8) %

$ 64

(38.5) %

Incremental non-GAAP tax expense (b)

(43)

Income tax provision (c)

—

(8)

GILTI and U.S. foreign tax credits (d)

(69)

(25)

Non-GAAP tax provision (a)

$ 33

39.3 %

$ 37

37.2 %

TABLE 7: CORE ILLUMINA ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP TAX PROVISION:

Three Months Ended

Six Months Ended

June 30,
2024

GAAP tax provision

$ 35

35.0 %

$ 80

37.3 %

Incremental non-GAAP tax expense (b)

Income tax provision (c)

(1)

GILTI, U.S. foreign tax credits, and global minimum top-up tax (d)

(20)

(33)

Non-GAAP tax provision (a)

$ 55

24.2 %

$ 108

24.9 %

(a) Non-GAAP tax provision excludes the effects of the pro forma adjustments as detailed above. Management has excluded the effects of these items in this measure to assist investors in analyzing and assessing past and future operating performance.

(b) Incremental non-GAAP tax expense reflects the tax impact of the non-GAAP adjustments listed in Table 2 and 4.

(d) Amounts represent the impact of GRAIL pre-acquisition net operating losses on GILTI, the utilization of U.S. foreign tax credits, and the Pillar Two global minimum top-up tax, which became effective in Q1 2024.

Investors:
Salli Schwartz
+1.858.291.6421
ir@illumina.com

Media:
Bonny Fowler
+1.740.641.5579
pr@illumina.com

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SOURCE Illumina, Inc.

Technology

Zifo Transforms Ontology Engineering with AI-Powered Intelligent Automation

Published

4 hours ago

April 30, 2026

Advanced AI solution speeds up ontology creation by 80%, generating structured, interoperable knowledge models for science-driven organizations.

CAMBRIDGE, Mass. and CAMBRIDGE, England, April 30, 2026 /PRNewswire/ — Zifo, the leading global enabler of AI and data-driven enterprise informatics for science-driven organizations, has developed an Intelligent Automation solution for Ontology Engineering, which is designed to seamlessly generate structured, interoperable knowledge models while accelerating ontology creation by 80%.

Overcoming the Bottlenecks of Manual Ontology Creation

Manual ontology creation in the biopharma industry has traditionally been a time-consuming process that requires specialized expertise. Organizations frequently struggle with semantic ambiguity, complex integration challenges, and limited scalability, resulting in workflows that can take weeks to complete. Zifo’s AI-powered automation tackles these challenges head-on by eliminating 80% of the manual work through automated class generation, description creation, and precise IRI mapping.

Addressing the Complexities of Semantic Knowledge

Developing comprehensive knowledge models often demands deep domain expertise to define relationships and align terminology. Zifo’s intelligent solution overcomes this by providing an AI-guided workflow featuring an intuitive interface, meaning specialized ontology engineering knowledge is no longer required. By leveraging LLM-powered generation, the solution creates precise definitions with a deep understanding of domain-specific context, while generating standardized synonyms and establishing controlled vocabulary alignment to eliminate inconsistent terminology.

A Solution Designed for Scalable Scientific Data Modeling

The AI-powered solution addresses critical format compatibility and integration points in ontology management:

Seamless Integration: Automated mapping connects directly to established ontologies, including NCIT, CHEBI, OBI, and EFO, via BioPortal and OLS APIs.Massive Scalability: Parallel processing and batch operations empower teams to execute large-scale ontology projects without performance limitations.Automated Hierarchies: The AI autonomously generates semantic relationships and parent-child hierarchies based on domain context and predefined relation vocabularies.Format Compatibility: The solution produces direct OWL/RDF exports with proper URIs, ensuring seamless downstream integration.

Unique Features include:

Multi-Source Integration: The solution combines BioPortal, OLS, and EMBL-EBI APIs to guarantee comprehensive ontology coverage.Intelligent Ranking System: The system uses AI-powered relevance scoring and justification for precise ontology mappings.Precise IRI Mapping: It ensures that each generated class is linked to the correct IRI, directly promoting semantic web compatibility.Human-in-the-Loop Design: The solution automates repetitive tasks while maintaining vital expert oversight.End-to-End Workflow: Users are guided through a complete pipeline, from initial domain knowledge input straight to exportable OWL files.Visual Knowledge Graph: An interactive graph visualization allows for intuitive relationship exploration and validation.Multi-Format Exports: Provides seamless export options in CSV, OWL, or HTML Ontograph formats for downstream use, collaboration, and visualization.

Strategic Value Across the Scientific Chain

This solution breaks down the traditional barriers of data structuring. Built on a robust backend of Python, LangChain, and leading LLM models, alongside a frontend framework using Next.js 15 and Cytoscape.js for graph visualization, the solution is highly adaptable. Furthermore, future optimization enhancements will include provisions for uploading user-defined classes or semi-ready ontologies.

About Zifo

Zifo is the leading global enabler of AI and data-driven enterprise informatics for science-driven organizations. With expertise spanning research, development, manufacturing, and clinical domains, Zifo serves a diverse range of industries including Pharma, Biotech, Chemicals, Food and Beverage, and more. Trusted by over 190 organizations worldwide, Zifo is the partner of choice for advancing digital scientific innovation.

For more information, visit www.zifornd.com; https://zifornd.com/practical-ai-blueprints/

Logo: https://mma.prnewswire.com/media/2731415/Zifo_Technologies_Logo.jpg

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SOURCE Zifo Technologies

Technology

UNC-Chapel Hill establishes ‘Carolina in the Capital’ with new Washington, D.C. office

Published

4 hours ago

April 30, 2026

CHAPEL HILL, N.C., April 30, 2026 /PRNewswire/ — The University of North Carolina at Chapel Hill has opened a new office in Washington, D.C., establishing an expanded presence for the University in the nation’s capital and creating exciting opportunities for students, faculty, staff and alumni.

Located at 101 Constitution Avenue NW, the 10,861-square-foot space – coined “Carolina in the Capital” – will support a variety of functions, including educational programming for undergraduate and graduate students, alumni relations and engagement with government partners.

As a leading R1 university, UNC-Chapel Hill annually attracts more than $1.6 billion to the state’s economy to fund research that creates a better quality of life for all its citizens. More than 60% of UNC-Chapel Hill’s total research funding comes from federal sponsors with the majority of that federal funding coming from the National Institutes of Health (NIH), which is based in the Washington area.

“Carolina in the Capital is a state-of-the-art facility that reflects our commitment to creating experiential learning opportunities for our students and faculty,” said Chancellor Lee H. Roberts. “The space is designed as an immersive learning environment where students can translate classroom knowledge into hands-on experience, which has never been more important. The facility also strengthens our ability to support engagement between our staff, alumni, policymakers and partners.”

Supporting students participating in Carolina’s Washington-based academic programs is a priority. For years, students and faculty have relied on temporary or borrowed spaces across the city. The new office provides a permanent home where students can gather, learn and build community while living and studying in Washington. A robust schedule of classes and events will fill the space throughout the year.

The Washington, D.C. region is home to the largest concentration of out-of-state Carolina alumni anywhere in the country. The new office creates a dedicated space to strengthen those connections and support networking, mentorship, professional development and community-building among D.C.-based Tar Heels.

The space will also serve as a platform to bring Carolina’s research and academic expertise into closer conversation with policymakers, industry leaders and member organizations. Carolina is the nation’s 11th largest university in the country based on research volume with primary federal funding coming from NIH and the National Science Foundation (NSF), both based in the D.C. area. Carolina is a proud member of the Association of American Universities (AAU) and the Association of Public & Land Grant Universities (APLU), which are both based in Washington.

The office is funded entirely through the UNC-Chapel Hill Foundation and does not use any state appropriations.

You can view additional photos of the space here.

Media Contact: UNC Media Relations, 919-445-8555, mediarelations@unc.edu

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SOURCE University of North Carolina at Chapel Hill Office of Communications

Technology

Investing.com Acquires Stonki to Accelerate Its Entry into the Agentic AI Era

Published

4 hours ago

April 30, 2026

The acquisition strengthens Investing.com’s AI capabilities, advancing a next-generation research assistant that can analyze markets, generate insights, and guide investors in real time

NEW YORK, April 30, 2026 /PRNewswire/ — Investing.com, one of the world’s largest financial platforms used by more than 60 million investors each month, today announced the acquisition of Stonki, an AI-powered investing assistant designed to help traders turn ideas into structured, actionable trading plans.

The move marks a major step in the company’s evolution toward agentic AI, strengthening its ability to deliver faster, deeper, and more actionable market insights to a growing base of more than 300,000 paying subscribers across its InvestingPro suite, the company’s premium subscription offering for advanced market data, tools, and AI-driven insights.

Over the past 12 months, nearly 3 million users have used WarrenAI, Investing.com’s AI-powered financial research assistant launched last year, to perform market analysis, making AI a central entry point into the platform’s ecosystem. With the addition of Stonki, the company is moving beyond traditional AI tools toward agentic systems that can proactively guide users through the investment process.

“We’re entering the age of agentic AI, where the technology moves beyond just answering questions to actively helping investors think, analyze, and act,” said Omer Shvili, CEO of Investing.com. “Bringing Stonki.ai into the fold accelerates our goal of building an agentic platform that will serve as a 24/7 analyst for our users. We are developing this to be more than just a tool; it will be a partner that identifies opportunities, tracks unfolding situations, and surfaces trade ideas even when the user isn’t active—giving our users the kind of edge that was previously only available to professional investors.”

Founded in 2025, Stonki is developing a new category of ‘agentic’ AI for investing, enabling users to turn investment ideas into fully defined strategies with entry and exit conditions, risk management rules, and continuous monitoring.

“We started Stonki because, as investors and traders ourselves, we knew how much time and focus it takes to stay on top of the market and properly manage a day trade, a swing trade, an investment idea, or a portfolio,” said Ulas Bilgenoglu and Itay Verkh, co-founders of Stonki. “We set out to build AI that could carry part of that load by continuously monitoring the market, turning ideas into structured strategies, and helping users make better decisions with clear entry and exit conditions, disciplined risk management, and ongoing tracking. Joining Investing.com gives us the scale, data, reach, and strong AI foundation to accelerate that vision. Together, we can create an experience where AI helps users stay ahead of the market, manage risk, and act with greater confidence.”

The acquisition expands Investing.com’s AI capabilities across both technical and fundamental investing workflows. Stonki’s technology is built around persistent, real-time intelligence, continuously monitoring markets, tracking user-defined strategies, and alerting investors when conditions align, rather than relying on one-off prompts or static analysis.

For active traders, the platform is evolving into a real-time analysis engine designed to support high-frequency decision-making with precision and speed. For long-term investors, it is becoming a central hub for research, enabling users to evaluate opportunities, set personalized alerts, and monitor portfolios based on their individual investment strategies.

Users will be able to define specific conditions, such as a stock crossing a long-term moving average, and have the AI continuously monitor the market, analyze relevant signals, and surface actionable insights in real time. The system will also review portfolios on an ongoing basis, helping investors avoid potential losses and uncover new opportunities aligned with their strategy.

This latest step builds on Investing.com’s broader strategy of expanding its AI-powered suite, including WarrenAI, ProPicks AI, and its recently launched AI Chart Analysis, all aimed at delivering faster, more accurate and more actionable insights to investors.

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SOURCE Investing.com